Journal of Economic Modeling Research

Homogeneity of groups in studies those use cross section and multi-level data is important. Most studies in economics especially panel data analysis need some kinds of homogeneity to ensure validity of results. This paper represents the methods known as clustering and homogenization of groups in cross section studies based on enviro-economics components. For this, a sample of 92 countries which produce the most greenhouse gases including CO2, clustered based on 18 criteria. Those criteria reduced to five primary components using factor analysis. Clustering of countries done by HCPC (Hierarchical Clustering on Principal Component) method. All 92 countries were clustered in 7 different groups. For each group properties of countries indicates the homogeneity of each cluster. In cross section analysis with many sections, especially analysis based on panel data, clustering, increases assurance of expected homogeneity and validity of result.

Why are some countries rich and others poor? And do poor countries converge toward rich countries in terms of economic performance? There are questions that have occupied the minds of economists for a long time, and the answers to these questions are the basis of the formation of economic growth patterns. During the development of developing countries, it is discussed whether institutional and structural homogeneity is a prerequisite for income convergence and performance of developing countries. Our research deals with institutional analysis in developing countries. Therefore, in this research, the formation of institutional and income convergence clusters in developing countries during the period of 2002-2020 has been investigated using the log t test of Phillips and Soule (2007, 2009). The results show that the convergence of institutional indicators among developing countries is rejected. However, the results of the cluster method provide strong evidence of the existence of converging clusters among developing countries. Also, in this study, the clustering of the per capita income of the studied countries has been done, which shows similar results to institutional clustering. which indicates that institutional clusters may be effective in forming income clusters.